ACCOUNTING – is the process of identifying, recording, and communicating

 IDENTIFYING – selecting economic events of a business transaction

 RECORDING – keeping a chronological diary of events of a business transaction

 COMMUNICATING – preparation of financial reports

NATURE OF ACCOUNTING

 It is a service activity.
 Accounting is a process.
 Accounting is both an art and a discipline.
 Accounting deals with financial information and transaction.
 Accounting is an information system.

BRANCHES OF ACCOUNTING

1. FINANCIAL ACCOUNTING

2. MANAGERIAL ACCOUNTING

3. GOVERNMENT ACCOUNTING

4. AUDITING

5. TAX ACCOUNTING

6. COST ACCOUNTING

7. ACCOUNTING EDUCATION

8. ACCOUNTING RESEARCH

9. ACADEMIC ACCOUNTING

MAIN TYPES OF ACCOUNTING

 PUBLIC ACCOUNTING

 MANAGEMENT ACCOUNTING

 GOVRENMENT ACCOUNTING

 INTERNAL AUDITING

ACCOUNTING SERVICES

 BOOKKEEPING

 CHARTERED ACCOUNTING

 TAX ACCOUNTING

 FINANCIAL CONTROLLER SERVICES

 FORENSIC ACCOUNTING

 ACCOUNTING AUDIT

INTERNAL & EXTERNAL USERS

 INTERNAL USERS

 EXTERNAL USERS

FORMS OF BUSINESS ORGANIZATION

 SOLE PROPRIETORSHIP

 PARTENRSHIP

 CORPORATION

 COOPERATIVE

TYPES OF BUSINESS OPERATIONS

 SERVICE BUSINESS

 MERCHANDISING BUSINESS

 MANUFACTURING BUSINESS
PRINCIPLES OF ACCOUNTING

1. BUSINESS ENTITY PRINCIPLE

2. GOING CONCERN PRINCIPLE

3. TIME-PERIOD PRINCIPLE

4. MONETARY UNIT PRINCIPLE

5. OBJECTIVITY PRINCIPLE

6. COST PRINCIIPLE

7. ACCRUAL ACCOUNTING PRINCIPLE

8. MATCHING PRINCIPLE

9. DISCLOSURE PRINCIPLE

10. CONSERVATISM PRINCIPLE

11. MATERIALITY PRINCIPLE

ACCOUNTING EQUATION IN BALANCE SHEET REPORT

 ASSETS = LIABILITIES + EQUITY

MAJOR ACCOUNTS IN ACCOUNTING

 ASSETS – resources owned and controlled by the company

 LIABILITIES – obligations of the firm arising from past events which are to be settled in the future

 EQUITY – owner’s claims in the business. It is the residual interest in the assets of the enterprise after deducting all its liabilities.

 INCOME – increase in economic benefits during the accounting period in the form of inflows of cash or other assets or decreases of liabilities that result in increase
in equity. Income includes revenue and gains

 EXPENSE – decreases in economic benefits during the accounting period in the form of outflows of assets or incidences of liabilities of liabilities that result in
decreases in equity

ELEMENTS THAT AFFECT EQUITY

 INVESTMENT

 WITHDRAWAL

 REVENUE

 EXPENSES

8 ACCOUNTING CYCLES

1. TRANSACTION

2. JOURNAL ENTRIES

3. POSTING

4. TRIAL BALANCE

5. WORKSHEET

6. ADJUSTING THE JOURNAL ENTRIES

7. FINANCIAL STATEMENTS

8. CLOSING THE BOOKS

BUSINESS DOCUMENTS NEEDED IN JOURNAL ENTRIES

 CASH RECEIPTS

 SALES/CHARGE INVOICE

 VOUCHERS